BLOCKCHAIN CAN MAKE CHARITY MORE TRUSTWORTHY

THE PROBLEM WITH TODAY'S CHARITY INDUSTRY

The Charity Sector is experiencing turbulence from the last few decades despite many taxation relaxations provided to both the Donor and the donee. The frequent issues experienced by the sector are –Trust & Transparency, Digital Adoption, Utilization of Funds, and many.

From these issues, it is quite understandable why the Charity Sector is losing its public trust. Apart from belief, many people stopped making donations due to a lack of transparency in the system. There is also the influence of cultural clashes on donation trends.

People will be more responsive in donating the funds to the institutes where there lies clarity in the system. The modern generation believes in results, and transparency is the leading feature to deliver the results to the Donor. But due to the current practice, Charity Sector is facing a decline in donations among the youthful, expanding doubt over CEO pay and worries about where donations end up.

CURRENT CHALLENGES FACED BY CHARITY INDUSTRY

·      the decline in the generation of Donations.

·      Higher Management and Charity overhead costs.

·      Donors have close to zero control over how noble cause use their donation

·      Lack of Transparency regarding the end utilization of Donor's contribution

·      Settlement times for moving funds from charities to recipients are excessively moderate

·      Improper utilization of Donor's fund

Now the question is any channel that exists through which we can solve these issues faced by the Charity Sector? Let's start our journey to find the solution to these problems faced by the charity industry.

The best suitable solution to eradicate the above problems is to transform the charity sector's eco-system by implementing Blockchain Technology. The first puzzle that emerges in our mind is, what does it mean by Blockchain Technology, and how can it help to make a better eco-system for the charity sector? So let's have an understanding… 

WHAT IS BLOCKCHAIN TECHNOLOGY?

Blockchain is a central part of all cryptocurrency economic networks. Blockchain, as its name suggests, consists of multiple blocks strung together. In a fundamental term, Blockchain is a distributed, decentralized, public ledger. Record-Keeping Technology adopted in the bitcoin network is Blockchain.

Satoshi Nakamoto once contrived it as the digital ledger behind Bitcoin; however, the innovation has since been applied to an assortment of different situations and demonstrated to be very valuable for digital currencies as well as for various sorts of advanced correspondence and data sharing.

Blockchain Technology works on the Term – Trustless. Trustless means there is no requirement for clients to confide in one another because all participating nodes are required to adhere to a predefined set of rules; instead, the Blockchain is distributed furthermore, imitated over a heap of computer nodes, spread far and wide.

It implies each time an exchange is affirmed or information is changed; every member needs to refresh its rendition of the Blockchain, as per those occasions, they need to arrive at a consensus concerning each change.

BENEFITS OF BLOCKCHAIN TO CHARITY INDUSTRY

Blockchain is one of the most inspiring technologies in the current world. It's a prediction that within a couple of years, the technology will entirely disrupt the world's working style positively, including the experience of philanthropy. Let's look at how Blockchain can benefit the Charitable Organizations, donors, and recipients -

1.     By Increasing the Transaction Processing Speed –

Blockchain eliminates the need for trusted intermediaries, and hence the transaction can be executed at a higher speed. The Blockchain build trust with contributors, beneficiaries, and different partners to contact the ideal individuals and improve organization expenses and adequacy.

2.     By Lowering the Transaction Cost –

Because of eliminating the need for intermediaries, each transaction's cost gets reduced in the Blockchain Environment. Besides, Blockchain brings down regulatory costs; more assets can arrive at the right, needy recipient.

3.     Increased Transparency –

Transparency is compulsory for this situation. Blockchain Technology works on Trustless Theme, and hence ultimately increases the clarity of the transaction. By monitoring the entire transaction sequence, the Donor can easily trace the utilization of funds donated and confirm whether the same has been used for the intended purpose. By permitting contributors to see all the more unmistakably where their funds are going, Blockchain may help reestablish a portion of the lost validity to a good cause.

4.     Improved Fund Generation –

The primary pain of high transaction costs is eliminated, which allows the Donor to transfer more money to the recipient at minimal or no charge.

5.     End of Hacking Era –

It's challenging to trace where the money is going in the Blockchain Technology Era. Higher the audit trail, lower the uncertainty, and cyber-crime from the philanthropy world.

6.     Proper Utilization of Funds –

Everybody can make a donor account and utilize the platform to help the causes they wish to. The critical aspect is that donors will have all access to the charity's immutable records of payment amounts and routes. Moreover, a donor account can be private if the Donor wishes to stay unknown.

IMPACT OF BLOCKCHAIN IMPLEMENTATION ON CHARITY SECTOR

How It Impact Donors

Shifting charitable giving to a blockchain could:

·      Give donors rights dependent on contribution size and notoriety.

·      Expanding donor involvement could increase donations

·      Build donor trust, in this manner expanding the amount of donations and the number of charities that get meaningful donations

·      Help donors choose where to spend their charitable amount by making charities that give blockchain-based straightforwardness more appealing targets for donations

How It May Impact Employment

Blockchain in charitable giving may:

·    Shut down charities that do not offer blockchain-based transparency and accountability

·    Create open doors for visionaries to work out new models of charitable giving

·    Eliminate employments in a good cause with enlarged payrolls

·    Reduce operation cost as Blockchain handles specific financial and reporting tasks

·    Allow for direct transfers between donors and recipients

·    Diminish costs by disposing of or lessening the position of intermediaries

USE CASES OF BLOCKCHAIN IN PHILANTHROPY WORLD 

The term Charity has been mis-utilized in recent past decades, and much of the public is no longer willing to take charity's word as bond. Blockchain Technology can resurrect the charity world's image by offering automation, transparency, accountability, and traceability. Blockchain can help to gain the lost credibility of the Non-profit organization.

Blockchain Technology can be implemented in the following areas in the Charity World –

1.     Facilitating Emergency Aid

Emergencies are the situation in which most of the charitable donations take birth, and the facility to trace the destination of the funds offered during emergencies is essential to lower the fraudulent claims and to increase the confidence in the system. And Blockchain Technology can quickly meet these criteria as the most outstanding feature of Blockchain Technology is that it present a complete audit trail and transparency.

2.     Transaction Fees

While making donations for a noble cause straightforwardly, the transaction fees are pain behind the scene. The Fees are generally charged by credit card, debit card, or by any Clearing House Processors. These fees range between 2% - 3%.

There are frequently many expenses included: the charge charged by the installment processor; the fee charged by a dispensing organization to send the cash to various causes that may not be straightforwardly associated with the donation arrangement; and the expense charged by the donation arrangement that encouraged the exchange in any case.

With computerized cash that works on the Blockchain, your donation goes straightforwardly to a foundation quickly and for free.

3.     Intermediary

Not exclusively are their financial middlemen yet besides government organizations, and people up and down the way that cash, merchandise, and administrations go through.

Too quite a bit of Donor's cash goes to charities overhead costs, regardless of whether due to fumble or in light of the fact that staff and office space are costly

Utilizing an open blockchain, watchdogs could have monitored how that cash was being spent and either prevented them from using money in the equivalent incapable manners.

4.     Accountability

Donation schemes and Charity organizations have lost their edge and credibility in the past decade or so. We have heard numerous examples where associations flame out and neglect to utilize the funds as guaranteed.

Alternatively, else, after all the hype is over, it transpires that the organization gets the majority of the money as service fees, and only a little bit reaches the actual person in need.

5.     Giving Chain Transparency

Lack of transparency lessens the quantum generation of donations. Donors have a fear of their funds being mis-utilized or not utilized for the intended purpose.

Blockchain can trace the entire transaction, from the inception of funds to the destination on which funds have been utilized. This is a much-needed feature to avoid fraudulent cases and restore donors' trust over the industry.

CONCLUSION

Blockchain possesses the capability to build trust among donors, beneficiaries, and management. It can help to reach the right people and improve efficiency. Blockchain can make the patronage wold so honest that the Donor can see what his donation has made the difference.

In extension to solving existing problems, blockchain solutions can empower charities and non-profits to deliver results in entirely different ways that would be impracticable without the Blockchain.

Adoption of Blockchain Technology can prove a paradigm shift in the way people donate their money with its unique features of immutable, transparent, and real-time access.

So, Let's Start Taking Positive Steps To Make Humanity More Powerful.

Sheetal Jain , CA

linkedin.com/in/ca-sheetal-jain-2994818a

Mayur Zanwar ,

CA |Blockchain Evangelist

Co Founder – Asset Chain Techlligence

https://www.dhirubhai.net/in/mayurzanwar/